Australia and New Zealand Banking Group Ltd v Compagnie Noga D'importation Et D'exportation SA & Anor

A settlement agreement may validly restrict a party from repeating allegations of dishonesty, while preserving the right to make factual statements and submissions necessary to pursue claims against other defendants. Such a clause is not contrary to public policy merely because the underlying civil proceedings involve allegations of fraud. The critical distinction is between compromising a private civil claim and improperly stifling a criminal prosecution or interfering with the administration of justice. The court will construe the agreement in its commercial and procedural context and will enforce a valid compromise of civil proceedings.

Noga had brought proceedings arising from transactions involving bills of exchange and had made allegations concerning ANZ’s involvement. Earlier attempts to introduce substantive claims of knowing receipt, knowing assistance and dishonesty against ANZ had failed on limitation grounds, although a fresh action had been permitted. The parties subsequently settled their proceedings.

Clause 9.1 required Noga not to repeat or publish allegations or claims connected with the proceedings, but preserved the ability to make factual statements and submissions concerning ANZ’s involvement when pursuing claims against other defendants. It expressly prohibited allegations of dishonesty against ANZ. During the trial of the related claims, Noga sought permission to make such allegations. ANZ sought a declaration that the clause was valid and effective, together with related injunctive relief.

1. Construction. Clause 9.1 prohibited repetition or publication of allegations made in the proceedings, including Folio 404. Its proviso permitted factual statements and submissions concerning ANZ’s involvement when Noga pursued claims against other persons. The express prohibition on allegations of dishonesty applied throughout the clause and prevented that exception from being used to revive such allegations.
2. The construction advanced by Noga was inconsistent with the language and commercial purpose of the agreement. It would produce the commercially absurd result that ANZ had settled after successfully resisting the proposed amendment, yet remained exposed to the same allegations in the existing proceedings.
3. Public policy. The clause did not restrain the prosecution of a crime or anything akin to a crime. Nor did it prevent Noga from pursuing compensation in the related civil proceedings. The settlement was an arm’s-length compromise of private proceedings, notwithstanding that those proceedings contained issues of a public nature.
4. The authorities concerning agreements affecting criminal proceedings did not govern the clause. The law favoured compromise of civil actions, and the court could intervene to prevent pursuit of a legal remedy in breach of a valid compromise.
5. A declaration was made as to the validity of the settlement agreement. No injunction was considered necessary, and no order requiring amendment of the pleadings was made.